The SEP Couch
In this podcast, Tim Pohlmann, CEO and Founder of IPlytics, hosts discussions with industry leaders, academics and policy makers on current topics around standard essential patents (SEPs) and as they relate to FRAND, licensing, litigation, dealmaking, policy, and regulation as well as general trends for markets where SEPs matter. Invited guests are interviewed in a 45-minute podcast format expressing their personal views on topics under discussion among IP professionals when it comes to essential IP. This podcast encourages an open discussion format while it remains neutral to the controversial opinions and viewpoints of invited guests.
#22 Roberto Rodriguez and Otto Licks | SEPs and the law in Brazil
Licks Attorneys is one of Brazil’s most respected law firms in litigation with a focus on complex, often technology-driven disputes that include standard essential patents (SEPs). With offices in Rio de Janeiro, Sao Paulo, Brasilia, Curitiba and Tokyo, Licks Attorneys combines industry knowledge with legal expertise to assist a wide variety of Fortune 500 high-tech start-ups in Brazil. The multidisciplinary team of attorneys has handled complex commercial and corporate claims over the last 20 years in major sectors including technology, the internet, telecommunications, life sciences, medical device, and finance.
In the podcast, Otto Licks, founding partner, as well as Roberto Rodrigues, partner at Licks Attorneys, elaborate on their experiences from over 10 years of SEP litigation in Brazil. While Brazil was historically in the second wave of worldwide SEP litigation campaigns, the country stepped up to be more and more in the first wave when patent holders plan their worldwide litigation to enforce SEPs. Otto Licks states that litigants can expect quick and efficient decision-making in Brazil. Here, patent holders like the fact that the rate of SEPs that were killed during litigation is almost 0%. One reason is that Brazil follows a bifurcated system, where different courts handle infringement and invalidity. Courts therefore always assume a patent to be valid. Also here the Brazilian patent office has a reputation of only issuing high-quality patents.
Brazilian courts always consider the licensing negotiation track record in their decision making and patent holders must provide evidence that they have entered licensing negotiations before issuing preliminary injunctions. However, Brazilian courts do not determine a FRAND rate. That is also why Brazil has never been involved with anti-suit injunctions in the past.
Another reason why Brazil is an increasing venue for SEP litigation is that the Brazilian smartphone market is one of the largest in the world. Here injunctions really hurt the defendant. Not only because of the market size but also for the high product margins in the market. Smartphone prices are comparably high in Brazil compared to other markets.
Both Otto Licks and Roberto Rodrigues conclude that they expect the number of SEP litigation in Brazil to increase further, maintaining Brazil’s position as a major jurisdiction for worldwide patent disputes.
#21 Mang Zhu | SEP Portfolio Management
Mang holds a PH. D in Electrical and Electronic Engineering and worked on different cellular standards when she started her career at Motorola in 1994. Already in 2003 after joining the IP team, she began to establish a process that ensured the tracking of standardization activities during the patent prosecution process. Mang’s methodology was optimized at Motorola during the LTE development period and well supported all of Motorola’s SEP licensing activities thereafter. Mang also supported the technical negotiations during Motorola SEP licensing negotiations. Here especially during the 2008 and 2012 programs Mang gained a lot of experience to well understand the patent quality requirements needed for successfully licensing essential and valid SEPs.
In 2017 Mang took a position at ZTE to lead the standards essential patent (SEP) team focusing on 5G SEP development in the IP department. Because of her experience Mang also started to support ZTE’s licensing teams quickly after she joined and since the beginning of 2022 took over the responsibility for ZTE’s whole patent portfolio including SEPs and non SEPs as the head of the patent asset management team.
In the podcast Mang stresses that research for new advanced technologies starts years before any standardization activities begin: “While we yet do not know what the 6G standard will bring exactly, I am sure many of our long-term research projects will contribute to the next standard generation.” ZTE employs several hundreds of cellular standard researchers as well as close to one hundred standard delegates who go to the standards meetings, present new technologies and submit technical contributions. ZTE’s SEP team makes sure that the research teams provide timely invention disclosures. The patent team then coordinates with outside counsel to have the identified inventions filed at international patent offices as quickly as possible to establish the priority dates.
Mang’s team is using a variety of IP data tools ensuring they have the latest standards contribution data, patent declarations data and legal status information at hand. E.g. searching prior art in a fully indexed standards contribution database ensures much higher quality result. Also, understanding what other market players file as well as what they declare or include in patent pools is very important as well as understanding competitors’ participation activities and level of contribution during standardization processes.
Mang stresses: “SEP portfolio management is not about the life cycle of one patent”. In her patent portfolio life cycle management approach, her team tags patents as to essentiality, validity and perceived value. This not only allows her to right size ZTE’s SEP portfolio but also support decision making for in- and out-licensing activities.
Mang is not worried too much about the sharply increasing numbers of companies and submitted contributions at standards meetings. 5G is a much more advance technology compared to 4G. While an increasing number of standards contributing companies may create complexity Mang also feels more input from many innovators also ensures more optimized standard features. Also, the increased number of patent declaration or over declaration is a natural consequence of the ETSI IPR rules where any potentially standard relevant patent must be disclosed. This increases transparency and one can always evaluate single portfolios during licensing negotiations to identify what is essential and what is not.
#20 Taraneh Maghame | SEP Licensing Realities
Ms. Maghame has served as senior IP counsel at Hewlett-Packard and Compaq Computer Corporation and has been a member of distinguished IP law firms Brobeck, Phleger & Harrison and Perkins Coie, specializing in IP litigation, licensing and counselling. She is a graduate of Georgetown University Law Centre and is admitted to practice in California and Washington State, as well as before the USPTO. In 2018, Ms. Maghame was appointed to the European Commission’s Expert Group on Licensing and Valuation of Standard Essential Patents. She has been included in the 1AM 300 World’s Leading IP Strategists for multiple years and is a frequent speaker on patent licensing and policy matters. Ms. Maghame was vice president of wireless programs and corporate development at Via Licensing Corporation, where she developed and managed strategic multi-party licensing programs in wireless and cellular technologies. Before joining Via in 2017, Ms. Maghame served as senior counsel in Apple’s IP and licensing group, focusing on patent licensing strategy and standards, and represented Apple in global standards-related organizations. Before Apple, she was acting general counsel and vice president for M&A, patent policy and government relations at Tessera Technologies. In this high-profile policy role, she helped to found the Innovation Alliance, an organization representing patent holders’ interests before Congress. She has testified before the Senate Committee on the Judiciary and the Federal Trade Commission regarding patent matters. Today Taraneh runs her own business: Maghame IP Consulting PLLC, a firm that provides strategic counseling and expert services focused on IP issues related to the development, use and licensing of standards.
In the podcast Taraneh elaborates on her experience working with SEPs in over two decades. While 20 years ago a few big telecom players owned SEPs and cross licensed these, today the SEP licensing has dramatically changed. This is because of the wide use of standardized technologies such as LTE or 5G and that there is much more at stake now. While the past years show that many SEP licensing deals were successfully closed at the same time patent litigation was dominated by SEP/FRAND disputes. Worldwide disputes may work for large smartphone manufacturers and huge SEP owners, Taraneh believes however that when SEPs are licensed for IoT use cases licensing must be much more efficient. The royalty rates will likely be much lower. Long disputes are not worth the investment for both sides of the table. Even more, it maybe be worth overthinking not only to license on OEM level because in the end it may create more revenue to license a large number of components or modules for a lower rate than the other way around. Also, Taraneh believes that the formation of Licensing Negotiation Groups (LNGs) should at least be considered, given there are no anti-trust issues.
Taraneh helps companies in new industry verticals that use connectivity standards or plan to use connectivity standards in their products. Taraneh believes that regulators should allow the markets to self-regulate but at the same time believes that policy makers should provide more guidance for solutions and especially increase transparency to decrease legal uncertainty in industries where SEP licensing is yet to be established. This is for the good of both the implementers and the SEP holders. From her days at Via Licensing she experienced great collaborations and constructive solutions when patent holders and implementers are open and transparent working together.
This year the Department of Justice, USPTO and NIST withdraw the 2019 SEP policy statement (June 2022). Taraneh is excited to see if we will see anything from the US regulators. While there are rumors for a draft bill that proposes a federal SEP royalty court with global impact, Taraneh believes that because this bill is currently unsponsored and was proposed by the industry it will take some time until anything will be put forward and during that time such a bill will change to considers all the views from the industry.
#19 Carlos R. Olarte | SEP litigation in Colombia
Carlos obtained a B.S.E. in Biomedical and Mechanical Engineering from Duke University in 1990. Later he went on to law school at Chicago-Kent College of Law, where he obtained his J.D. in 1993. He subsequently validated his law degree at the Pontificia Universidad Javeriana (Bogota, Colombia) in 1994. Carlos joined a well-known international law firm from 1993 to 2003, after which he began his own practice as co-founder of OlarteMoure.
His professional practice focuses on patent prosecution, litigation, discovery and related counsel, including strategic planning for the protection and value assessment of new technologies. A good portion of his practice focuses on the pharmaceutical and life sciences industry, including participating in the development of start-up projects for new product launches. Another important client base includes local universities and research-intensive industries. Matters handled by Carlos have included seminal cases put before the Colombian high courts and the Andean Court of Justice, including compulsory licensing projects. He also has extensive experience on issues relating to data exclusivity for the pharmaceutical and agrochemical industry. The combination of his technical and legal expertise clearly distinguishes Carlos from most other patent practitioners in Colombia and Latin America.
Carlos is the expert when it comes to SEPs and the law in Colombia. In the podcast episode he elaborates on the SEP case currently litigated in Colombia – Ericsson vs. Apple – and what happened so far. He explained that Apple failed already twice to overturn a 5G iPhone and iPad sales ban in Colombia where Apple even invoked Art. 8 of the famous Universal Declaration of Human Rights.
Latin American countries are not usually seen as a first line option when building a strategy to deploy global litigation campaigns to enforce patent rights. But the case has shown the effectiveness of the courts in Colombia. Carlos explains that Colombia follows a bifurcated system like Germany and Brazil, where different courts handle infringement and invalidity. That speeds up the process, once infringement is determined a plaintiff must not wait for validity determination.
In the current Ericsson vs. Apple disputes Colombia is the first country to issue a Preliminary Injunction preventing Apple from importing, selling, marketing and advertising devices incorporating 5G technology (such as iPhones 12 and 13). The decision even included an order to Apple to restrain from seeking an “antisuit injunction” in a foreign country. Carlos does not believe that FRAND will be determined at the Colombian court, seeking damages is the current strategy.
In Carlos final summary he stresses that the Colombia as a jurisdiction is increasingly attractive not only for SEPs.
#18 Claudia Tapia | How to set FRAND rates
“FRAND should be a framework that all stakeholders can innovate on together!“
Dr. Claudia Tapia is Director IPR Policy at Ericsson, where she leads the IPR Policy’s Research team and its activities worldwide. She is a speaker, writer, lecturer and reviewer in IP and standardization-related topics. Prior to joining Ericsson, Claudia was Director IP Policy at BlackBerry. While at BlackBerry, she focused on various aspects of intellectual property, including intellectual property rights policies in standards, global patent policies, as well as licensing and litigation. Claudia holds a law degree from the University of Valencia, an LL.M degree specializing in International Patent Law from the Ludwig-Maximilian University in Munich and a PhD degree on FRAND and Standardization in the telecoms sector from the Faculty of Law in Augsburg (summa cum laude). Claudia is also president of 4iP Council, a non-profit research council dedicated to developing high-quality academic insight and empirical evidence on topics related to IP and innovation, and a member of the Editorial Board of The Patent Law magazine and of the Intellectual Property Magazine and member of the Advisory Board of C-IP2.
In the podcast Claudia, speaking on her own behalf, elaborates about the lack of incentives for standard implementers to negotiate a FRAND license in good faith. Here she explains that companies typically implement the standards subject to SEPs first before anyone even approaches them for royalties. And then when negotiation starts there is little incentive for implementers to find reach a FRAND agreement. That’s why SEP holders must go to court in some cases. Also, she explains that she believes that past damages for the use of SEPs without a license will also not properly compensate SEP holders, because these damages typically only relate to the patent/s that is/are part of the litigation, which represents only a very small share of the whole portfolio subject to be licensed. Moreover, damages do not properly compensate for the additional costs that the enforcement of the patents has created and do not typically sanction bad behavior which in return creates too little incentives for implementers to license in good faith. Put differently, a willing licensee should not be treated the same as an unwilling licensee. Otherwise, willing licensees would be discriminated and there would be less opportunity for innovators to obtain reasonable royalties on a timely manner, which they generally reinvest in the next generation of the standard Claudia explains. Finally, Claudia refers to a legal maxim “Justice delayed is justice denied”. In other words, if legal redress or equitable relief to an injured party is available, but is not forthcoming in a timely fashion, it is effectively the same as having no remedy at all. Purposely delaying of a FRAND negotiation to avoid paying FRAND or force the SEP holder to accept royalties below FRAND, i.e., hold out, could be improved if there was a time limited to such negotiations. Here Claudia believes 12 months for courts to issue their decision regarding FRAND and 6 months for appeal’s court (if appealed) would be more reasonable.
When it comes to the value of 5G in IoT Claudia believes that we will have to wait and see what IoT will bring and how devices in different industries in the end will be connected. There may indeed be use cases where a fiber cable may be more efficient while there will also be many use cases that will need to rely on cellular connectivity. This is particular the case for issues related to security, connected via wireless technologies.
For Claudia, FRAND should be a framework that all stakeholders can innovate on together. Such a framework however also needs compensation on time. Claudia says that too often people do not see the big picture, i.e., they forget how important standards are for innovation today but even more for the future.
#17 Morgan Reed | How FRAND will work in the IoT
Morgan Reed is the president of ACT | The App Association and one of the board members of the LESI SDOs. He specializes in issues involving application development relating to privacy, intellectual property, competition, and small business innovation. His expertise and knowledge have been sought by the House and Senate in multiple hearings while his commentary and insight are a major draw for news networks including Fox Business News, MSNBC, CNBC, CNN, and ABC, the Wall Street Journal, and The Washington Post to Ars Technica and Slashdot. Morgan has authored and contributed to several white papers and is a part of the developer team for the Linux Router Project (LEAF), and remains an active Apple and iOS licensed developer. Leading the App Association, Morgan has leveraged ACT’s resources to host innovation workshops across the country. Organizing events with venture capitalists, business leaders, and attorneys, he helps to foster innovative new technologies by helping emerging businesses manage their intellectual property.
Morgen learned how to program at a very young age and first got in touch with standards development as he was involved with the implementation of the 802.11b analytics kernel. And right from the beginning also back then the question of how Intellectual Property is handled by standards was one of the major discussions.
In the podcast interview, Morgan elaborates on topics that concern SEPs and FRAND for his member companies, which are mostly innovative small medium-sized companies. Morgen stresses that the ACT members find IoT use cases increasingly important in developing software and products e.g. for agriculture, healthcare, or even firefighting. When looking at IoT and connectivity his members are concerned about SEP licensing practices and in particular that the SEP holders can choose where to license SEPs in the value chain no matter who actually implements a standard such as 5G. The ACT members are often small or medium-sized companies that source hardware and software from other companies to build a new product. But with a SEP license, they will always be in a position of legal uncertainty and will not know the price they may eventually have to pay at some point. Morgan explains that typically small players are not approached in the beginning but once you get bigger you get a call, which in his opinion, makes it worse.
In another discussion, Morgen discussed injunctions in the context of SEPs. Here he stresses that injunctions are of course important to enforce IP rights, but injunctions should be very rare given the potential to put a level of pressure on companies to enforce prices for SEPs that are not FRAND anymore.
ACT members need a balanced IP system and an ecosystem where standards work. ACT members will be the ones who will build and create the next new inventions the whole world will depend on and SEP holders should have the interest to let that happen.
#16 Alissa Cooper | Why Standards Matter
“The diversity of the standards development organizations (SDOs) is itself a virtue, as you do not want any SDOs to work the same”
Alissa Cooper is the Vice President and Chief Technology Officer for Technology Policy and a Fellow at Cisco Systems. She leads and supports the company’s technology policy work on artificial intelligence, broadband, and technical standards. In fact, she was the first female chair of the Internet Engineering Task Force (IETF) in 2017, a position she held until 2021.
Alissa holds a Ph.D. from the Oxford Internet Institute and MS and BS degrees in computer science from Stanford University. Prior to joining Cisco, Alissa served as the Chief Computer Scientist at the Center for Democracy and Technology, where she was a leading public interest advocate and technologist on issues related to privacy, net neutrality, and technical standards.
When first joining the IETF Alissa was impressed by the cooperative nature of standards development where worldwide experts from all over the world meet, discuss, and find alignment on how to set a standard that allows better interoperability for different systems and products in the market. Alissa points out that these experts work for competing companies and that means you do not necessarily trust each other. But that’s a good thing she explains as standards development is about finding consensus about different views. Companies heavily invest in standards development to ensure that there is access to markets, and this only works when all stakeholders take part.
The rules and governance of standards bodies however are very diverse, depending on the purpose, technology, and industry. There are hundreds of private-led standard organizations. These bodies are subject to different procedures and rules and Alissa points out that this heterogeneity is needed to meet the different needs of each industry and technology. While the private standards consortia have individuals or companies as members international bodies such as ITUT, ISO or CEN have countries as members. These more formal bodies set general rules and guidelines, liaising with the private-led standards organizations.
Alissa explains that the standards development process takes place in meetings in different groups and committees within proposals submitted and discussed by its members. Here typically one person, expert, or entity is driving an initial item or proposal that is presented. Standards development in most of these organizations is consensus-driven, which means that all oppositions to proposals and ideas are considered and discussed. This makes sure that the final standards are approved and accepted by all members and thus the industry. Even more, some standards bodies also ensure the wide adoption of standards with testing and feedback loops into the standard development process, making sure that standards can be easily implemented and deployed.
Standard development is a means to influence technology trajectories. This is not only of interest to private companies but also to governments. Considering the geopolitical crises, the past years have triggered a discussion about excluding certain companies with headquarters in certain countries from the standards development. Alissa has a very clear standpoint about those discussions as she believes that the exclusion of any company or country would in the long term always harm the system. She believes exclusion creates parallel processes while competing for national standards will always decrease interoperability and access to global markets.
Alissa says in her final statement that there is an incredible diversity in the standard development ecosystem that is often overlooked. Blanket statements of certain companies or countries that are supposed to be dominating or winning in standards development, ignore, in her opinion, the complexity of the reality. Alissa states that it may be hard to understand the diversity of all these standards development groups but it’s worth understanding this diversity.
#15 Kirti Gupta | Global Standards Leadership
Dr. Kirti Gupta is the Chief Economist at Qualcomm Inc., where she serves as an in-house economist, specializing on Intellectual Property (IP) and competition policy and strategy. In this role, she is responsible for managing the substantive direction of the global IP policy and advocacy outreach efforts, and for conducting original research on issues related to IP and competition law and economics. She has been involved in various international antitrust and litigation cases. Kirti has also been responsible for developing economic models for determining Qualcomm’s optimal IP strategy world-wide and on designing algorithms for IP portfolio valuation. Prior to her role as an economist, Kirti spent over a decade as a wireless systems engineering expert, working on research and development of third and fourth generation (3G and 4G) wireless cellular systems and has represented Qualcomm in various global technology standards bodies. She is a co‐inventor of thirty-five patents in the field of wireless communications. Dr. Gupta holds a Master’s degree in Electrical Engineering from Purdue University, and a Ph.D. in Economics from the University of California, San Diego.
Kirti starts the podcast with providing insights from her technical knowledge of standards development. She explains that people often forget about the complexity of the technology that we deal with. 4G alone is subject to over 1,400 specifications. Printing these hundred pages documents would fill whole rooms. And thousands of engineers work on various complex technical aspects that are so different that a person working on cellular security aspects would not even understand a person working on location services or coding aspects. This is how rich and complex this tech ecosystem is. This complexity must be considered when economist talk about ex ante and ex post worlds.
Kirti goes on and comments about some of the recent policy debates and ideas floating around. In her view a publicly available claim charted database of SEPs would not make any sense. Claim charts are complex and expensive and are typically exchanged in licensing negotiations under NDA. NDAs are requested by both parties. Licensees would e.g. never want to disclose information on future product plans or volumes of sales in certain countries to the public. Kirti also points out that she believes claim charting by third parties may also be difficult because we would need experts with different skill sets – patent examiners from patent offices are not a fit in her view.
Kirti also believes that setting an aggregated royalty rate to determine a share of this rate does not reflect the value of SEP portfolios. In Kirti’s opinion the top-down approach is a forced central planner approach. She believes you cannot take a price cap and then use simple counts of patents to arrive at a FRAND rate. That to her has no economic foundation. Kirti explains there is some very core and valuable patented technology that must be valued much higher than some incremental technology. Also, Kirti argues that licensing is always about a dynamic patent portfolio, like a leaking bucket. Patents expire and lapse falling out of the bucket while new ones are coming in. So, you will always have a license that covers the bucket no matter what’s in it.
With regards to where to license in the value chain Kirti confirms that Qualcomm offers licenses on different levels e.g. for automotives on the tier 1 level the DCU (Data Capture Unit) level and also tier 2 level the module makers the telematics. Kirti argues it does not matter where to license in the value chain if the rate does not change. It only matters for where it practically makes most sense to license. Licensors must now deal with the reality of new use cases such as IoT to identify what practically makes sense.
#14 Takanori Abe | The Japanese view on FRAND
“Foreign SEP holders should not think Japan is a hostile jurisdiction to the SEP holders because of no SEP litigations recently. We do not know how the current judges render the judgments. Japan has reformed its patent litigation and now plaintiff patentee’s winning rate has increased, and the invalidity rate is below 20%. Thus, Japan may be a good jurisdiction for SEP holders to file a lawsuit.”
Takanori is the founder of ABE & PARTNERS a law firm specialized in intellectual property and international business transaction. Takanori is a leading expert on any FRAND/SEP matters in Japan who understand the SEP situation in Japan like no other. He helps international companies to get a better understanding about how SEPs are treated in Japan, especially about recent court judgements and communications of various Japanese ministries.
Japan yet had only a few SEP cases so far: Apple v. Samsung with a judgment rendered in May 16, 2014 as well as Sharp v. Tesla January, February, and March of 2020. In the podcast Takanori explains and elaborates on the court outcome. In the Apple v. Samsung case e.g. it was decided that the royalty under FRAND condition for iPhone 4 and iPad 2 Wi-Fi+3G is approximately ¥9.96 million ($100,000).
Furthermore, Takanori explains the different public communications that were recently published: Government agencies have published following reports: “Manual of ‘Hantei’(advisory opinion) for an essentiality check” (March 2018,Japan Patent Office [JPO]) (manual, Hantei-E), the “Guide to Licensing Negotiations involving Standard Essential Patents”(June 5, 2018, JPO)(the guide), the “Guide to Fair Value Calculation of Standard Essential Patents for Multi-Component Products”(April 21, 2020, the Ministry of Economy, Trade and Industry [METI]) (the basic concept), the “Intellectual Property Promotion Plan 2021”(July 13, 2021, Cabinet Office)(the plan) the “Interim Report” (July 26, 2021, METI) (the report).
JPO the guide aims to enhance transparency and predictability, facilitate negotiations between rights holders and implementers, and help prevent or quickly resolve disputes concerning the licensing of standard essential patents (“SEPs”). METI published the basic concept because risks involving SEP licensing negotiations and disputes have been increasing significantly. Cabinet Office published the plan to show future IP strategies with seven key priorities. METI published the report because of increasing importance of SEPs in recent years, the number of SEP declarations has been increasing.
Takanori is classifying these cases and reports as either pro-SEP holder, neutral, or pro-implementer. The “manual, Hantei-E”, “the guide” and “the plan” may be classified as neutral, while the decision and judgment in Apple v. Samsung, “the basic concept” and “the report” may be classified as pro-implementer. The reason they are either neutral or pro-implementers and not pro-SEP holder may be because most of the Japanese industries are implementers.
Even though it is perceived that the Japan is more licensee friendly in fact Takanori points out that no one knows whether the Japanese courts are more implementer friendly – the number of cases are yet too small. Takanori believes the main reason there is little SEP litigation in Japan may be that the foreign companies still have the impression that Japan is an anti-patent jurisdiction where the patentee winning rate is low and patents will be easily invalidated. However, this is a misunderstanding as everything has reformed. The winning rate became higher and invalidation rate is now under 20%. While the JPO and the Cabinet Office are on the neutral position, METI seems to be on the implementer’s side and trying to influence future court judgments. It is because Japanese industries are afraid to be sued.
#13 Evelina Kurgonaite | The Fair Standards Alliance’s view on FRAND
Evelina Kurgonaitė-Swoboda is the Secretary General at the Fair Standards Alliance – a Brussels-based association that advocates fairer licensing of standardised technology in the development and rollout of the IoT. Evelina previously served as Head of Policy Strategy and Legal Counsel at Samsung Electronics in Brussels. Evelina has 15+ years of experience in EU & competition law and public affairs. Having spent seven years in private practice – including at Sidley Austin and Morrison Foerster – Evelina established and managed the European arm of global news service PaRR, part of the Financial Times group at the time. Evelina holds LL.M from Helsinki University and MA from King‘s College London. Evelina is the founder and chair of Women AT (W@) – a platform that connects and promotes women professionals around the world.
In the podcast Evelina elaborates on the view of the Fair Standards Alliance on matter such as the regulation of public authorities on FRAND matters, transparency about claim charts, transparency about comparable license agreements and the problem of extensive NDA provisions. She also explains why in her view Avanci is not always seen as the neutral platform representing both licensors and licensees and Evelina presents her view about how SEP licensing may work for new IoT applications.
#12 Paul Bawel | How to Manage And Set Up Patent Pools
Paul is Senior Vice President at Access Advance LLC where he is responsible for business development. He has been involved in multiple patent pools and licensing program during his 25+ years as an intellectual property attorney, including for MPEG 2, MPEG 4 Part 2, AVC, HDDVD, BluRay, HEAAC, HEVC and now VVC. Paul started his career to work for General Electric’s licensing department. He went on to work for General Instrument, first as the IP Portfolio Law Director, and then as the Broadband Sector IP Law Director (for Motorola after it purchased GI) managing the IP law department and IP related matters. After that Paul worked for Microsoft as a Business Division Patent Counsel to then work for Acacia Research Group identifying, valuing, and purchasing patent portfolios. Since 2015, Paul has worked for Access Advance, first as Senior VP of Licensing building their HEVC Advance licensing program, and now as Senior VP of Business Development developing, launching and now building their VVC Advance licensing program.
Paul believes that patent pools are important to facilitate standardized technologies such as HEVC or VVC. Patent pools reduce the transaction costs for all implementers. Havening more than just one patent pool (HEVC is subject to 3 patent licensing programs and VVC currently has 2 licensing programs set up), also will in his view not hamper standards adoption. Also, two or three patent pools still reduce the number of licensors. There has been criticism that HEVC was not as successful as AVC, where Paul argues that there is a lot of data tell a different story and that provides evidence of the success and wide adoption of HEVC. In his view the HEVC patent pool situation supported that success. Also, the recent litigation between Access Advance and Vestel was no setback for Access Advance, Paul argues. Here media did not tell the whole story. What is true due to a substantial number of overlapping patents in the HEVC Advance Patent Pool and MPEG LA’s HEVC patent pool to which Vestel was licensed to, the German court In Düsseldorf found the Access Advanced HEVC license not FRAND. Access Advanced in March 2022 therefore revised its policy responding to the Düsseldorf District Court’s December 21, 2021 ruling. Importantly, the court once again did not express concerns with any other facet of the HEVC Advance Patent Pool, including its royalty rates.
One reason why more than just one patent pool was formed for VVC is that not only the licensing rates and licensing models differ across the pool programs, but also the internal revenue sharing policies can be very different. At Access Advance Paul states that the pool considers the internal royalty sharing counting patents on a patent family basis so that there are no incentives for patent pool licensors to file e.g. multiple divisional patent applications that cover very minor inventions just to increase their share in the patent pool. The different rules and licensing rates therefore attract different SEP licensors to either join Access Advance or MPEG LA’s VVC patent pool
#11 Johanna Dwyer | How to make SEPs the core asset of your business?
“We would see much more deals and less friction with SEPs and FRAND if people were to do things with more rigorousness and transparency!”
Johanna Dwyer is the founder and CEO of QipWorks, a global IP consultancy business that partners with companies, innovators and investors to build, manage and utilize IP portfolios. Before QipWorks Johanna spent 12 years at BlackBerry, originally designing radios as a cellular wireless engineer and later participating and then leading a global radio standards team active among others, in the 3GPP the IEEE. She worked closely with licensing teams developing processes for identifying, evaluating, managing, validating, and monetizing investments in intellectual property.
Johanna and her QipWorks team provide extensive expertise in IP strategy and patent portfolio development and management as well as litigation support and standardization advice. Johanna realized that many of the small and medium sized businesses yet do not treat patents as their core assets. Such assets must be explainable and have a purpose for business. QipWorks helps with developing patent portfolios and here in particular for companies that conduct research and development close to the development to standards such as 4G/5G or Wi-Fi technologies.
Johanna was part of the team that developed the BlackBerry patent portfolio that was just in January 2022 sold for $600M to Catapult IP Innovations Inc.. The BlackBerry patent portfolio includes many SEPs for standard such as 2G, 3G, 4G, 5G, Wi-Fi, AVC/HEVC/VVC and others.
Patents that read on a standard are of high value as SEPs can be used to joining or creating SEP licensing programs or as bargaining chips in FRAND cross licensing negotiations. In any case, owning SEPs ensures the owner a seat at the table when the next generation of connectivity is developed. But filing patents that later become standard essential is a challenging process. R&D teams, IP patent boards and prosecution teams must closely work together. Here claims must be compared to the current standard versions early on, which is challenging as standards evolve and claims change in the prosecution process before they are granted. Johanna and her team make sure that such patents are not only essential but also valid and enforceable. Johanna says: “With SEPs a near miss is worthless. If your patent claims miss the final standard you can as well abandon those patents as they have no value”. Standards development and being able to contribute technology is much more time and budget consuming as many people think. An engineer that goes to standards meetings must prepare the meeting, must be active at meetings but also be able take the learnings from the meetings to again prepare the next one. That is a full-time job with the focus on submitting high quality standard contributions that others agree and accept in the process. That engineer has no time to sit with patent attorneys. At Research in Motion (Blackberry) Johanna explains, they had so called standards coaches who’s job it was to “own” the patent in the prosecution processed aligning patent filing and standard development strategy. All that is very labor intensive, and experts need to know both the technology and at the same time must have knowledge about the patent prosecution process.
But owning SEPs is just the beginning, one must also have the right strategy in place to sell, license, or further develop SEP portfolios in the market. Johanna believes that such a process can only be installed in companies that realize that patents are core assets that patents have value for the shareholder. Patent strategy therefore should be introduced and play a core role for board room decisions.
#10 Mark Cohen | SEPs and the law in China
Mark Cohen（柯恒} is a Distinguished Senior Fellow and Director of the Berkeley Center for Law and Technology at the University of California, Berkeley. He has served as the Senior Counsel, China for the USPTO. Formerly, he was Director of International Intellectual Property Policy at Microsoft Corporation. Prior to that time he was Of Counsel to Jones Day’s Beijing office. Before then, he served as Senior Intellectual Property Attaché at the U.S. Embassy in Beijing and as Attorney-Advisor in the Office of International Relations at USPTO. In total, he has nearly 30 private, public sector, in house and academic experience on IPR issues in China.
In Marks view:
“China is a much more complex and a much less transparent environment than many think it is. If you do not have a governments relation person on your team and if you can’t mine the docket data you can’t win a Chinese SEP litigation.”
Mark has over the years conducted several empirical analyses of the Chinese legal system and SEP litigation cases have drastically increased. SEPs are of the highest importance in China and very often relevant and on the agenda of board room decisions. Here the Chinese patent and legal system has seen a great development. Courts are efficient and, in some cases, often faster than US or European courts. However, still the legal system lacks transparency as not all decisions are public, and the litigation dockets are incomplete. As to the publicly available data it looks as if SEP decisions with Chinese companies involved do not rule in favor of the local Chinese companies. However, if rulings and decisions are not all public it’s very difficult to confirm that with the given data. Also, while judges have access to the dockets and other do not, we see decisions that reference nonpublic court rulings which creates confusion and makes it difficult to win a case.
Despite the incomplete data China has however gained importance as being an international venue for SEP litigation. This may not be surprising given that most worldwide sold smartphones are manufactured in China and that the Chinese single market is the biggest in the world for SEP relevant products such as phones, tablets, smart watches, TVs and so on. SEP owners one the one hand find it adventures to litigate in China as injunctions are much more frequently granted. However, on the other hand damages are much lower compared to Europe and the US. China is not the country of unlicensed products anymore and Intellectual Property enforcement is taken much more seriously. However, Mark stresses again cases matter and if not all of them are public we have a problem as lawyers and judges need to be able to reference and consider decision from past cases.
Mark also worries about the increasing cases of anti-suit and anti-anti-suit injunctions. The Chinese legal system should not be underestimated, and its power and influence will grow. So are the increasing number of internationally active patent owners. Indeed, the IPlytics data confirms that Chinese companies have had the highest growth rates in SEP declarations and standards contribution submissions over the past 5 years with increasing numbers of patent filings not only in China but also granted in the US and Europe. Mark believes that the WTO (World Trade Organization) should help in aligning international rules and guidelines and should be much more recognized not only by China but also the US and other countries.
Mark also discusses the trade war between China and the US and the ban of some Chinese companies on the US market. A company such as Huawei that is banned from selling products in the US but is one of the largest SEP holders in the world with a large valid US portfolio creates a risk for US operating companies. If there is no need to cross license Huawei acts like an NPE in the US and may enforce patents much more aggressively. Also, to recoup its R&D investments and missing income from the product market.
#9 Ran Xu | Xiaomi’s market entry to SEP licensing
Ran Xu is the head of licensing at Xiaomi. He earned his PhD in wireless communications at the University of Bristol and worked as a chip designer at Cambridge Silicon Radio and Samsung. In 2013 Ran came back to China and joined a start-up company called Zhigu. During his years with Zhigu was the time when Ran entered into the IP world and where as an inventor he created more than 100 patentable inventions which turned into more than 100 granted patents today. In early 2016, the team at Zhigu was acquired by Xiaomi and became the IP strategy team within Xiaomi taking care of Xiaomi’s patent licensing and acquisition business. Today a lot of the licensing matters are related to SEPs and have become a major focus of Ran’s daily job at Xiaomi.
Ran says that Xiaomi aims- to become the world number 1 handset manufacturer in 3 years’ time. Ran believes that one key factor behind Xiaomi’s success is the company’s mission which is to build amazing products with honest prices. Xiaomi also sells other smart devices such as tablets, wearables, smart TVs, robot vacuum cleaners or electric bikes. Even more, Xiaomi CEO Lei Jun said that is Xiaomi is expecting to mass produce its own electric vehicles in the first half of 2024.
Xiaomi was considered a new market entrant a few years back and with regards to SEPs had yet a small patent portfolio. There are two ways to build your SEP portfolio, either from your own patent filing or via patent acquisition. So, in the early years, patent acquisition was a more efficient way to build the portfolio. Xiaomi however started to actively participate standardization since 2016 and the IPlytics data also shows that the number of standards contributions e.g. for 5G has been sharply increasing with about 1,500 contribution in 2021 alone. Through all these years of R&D efforts, Xiaomi has built a sizeable 5G portfolio. Ran’ SEP strategy:
“Xiaomi will not proactively monetize its SEPs now or even in the future. SEPs are rather means to decreasing Xiaomi’s royalty burden through cross-licensing.”
Well negotiated cross licensing SEP deals will allow Xiaomi’s users to enjoy the products and innovative technologies at a better price, which makes the investment in standardization and SEPs worthy.
Ran believes that there are a lot of factors which make SEP licensing negotiations challenging. One of them is that sometimes the negotiation lacks transparency. For example, when you encounter a licensing proposal from your counterpart, for most of the cases and even if you have made your request, you cannot obtain sufficient information from your counterpart to make your own evaluation. Another challenge are the different perspectives on FRAND terms.
And Ran believes FRAND royalties will be very different for IoT devices as IoT devices in comparison to handsets use connectivity standards technology very differently. A fitness wearable for example transmits much less data compared to a handset. One idea was that the royalty rate for SEPs is based on how much data is transmitted from standard compliant devices. That could be one approach to understand how much value the patented technology brings to the product.
Finally Ran comments on Xiaomi’s strategy to yet not enter the US handset market. While Xiaomi was once on a US ban list a US court decision took Xiaomi off that list and yet none of the Xiaomi products were banned. Even more a look at the Xiaomi patent portfolio shows that just after China, Xiaomi files most patents in the US. Ran believes that if at some point Xiaomi handsets become available in the US, which is one of the most attractive markets in the world, Xiaomi’s best quality at honest price products will be welcomed and loved by the US users.
#8 Pio Suh | SEP monetization and enforcement
Since July 2018 Pio Suh is assigned as the Managing Director of IPCom based in Munich, Germany. He is an attorney and member of the German Bar since 2006. Pio has over a decade experience in SEP licensing and patent litigation in the field of communication technologies. He has worked in-house for several multinational Fortune 500 companies – including Qualcomm, Oracle and Philips – to implement patent licensing, enforcement and litigation strategies on a global scale.
When IPCom was founded 15 years ago everything started with licensing the GSM and UMTS SEP portfolio acquired from Bosch. Today Pio explains that IPCom is not only acquiring SEPs from other patent holder, but as a company acts as an active contributor to the 3GPP standard development. Indeed, the IPlytics contribution data confirms over a hundred contributions submitted to the 3GPP since 2016 for specifications related top 4G and 5G technologies.
Pio talks about how the legal environment changed from his time at Philips, where the licensing team back then was able to get injunctions on SEPs much easier, compared to today where in Europe it became very difficult to get injunctions for SEPs. In his perspective, with the missing threat of an injunction, a situation where the licensee delays the process is inevitable. Why would a licensee promptly pay and accept an offer if there are no costs for delay?
Pio says that:
“for a SEP licensee it is always cheaper to delay the process.”
If the licensee has not inventive to speed up the process, they will prolong the negotiation. Here China for some cases at least, has proven to be more efficient in granting preliminary injunctions.
Pio goes on to talk about the different perspectives on what is a fair reward for providing access to patented standardized technology. And for understanding what’s FRAND in his view it also depends on the unit that must be considered. In his opinion a telecommunications carrier should pay royalty for SEPs depending on the number of network subscribers. In other words, the users of the network. Carriers argue however that one must use the net selling price of a base station as the basis to determine FRAND. Therefore, carriers do not want to pay royalties but point the finger at the base station manufacturer such as Ericsson, Huawei or Samsung. However, in Pio’s view, base stations are not the accurate unit to represent the value the patented technology brings to the users. This general misalignment about what the basis for FRAND determination should be and who should pay in the value chain makes it difficult to negotiate.
IPCom owns SEP portfolios in the cellular telecommunication space. Here the handset manufacturer market is quite easy to identify. Pio explains that the barrier to get a product on the handset market is quite high and needs significant investments in R&D, know how, manufacturing facilities supplier networks and so on. This is very different for example to printing and pressing a DVD – where Pio targeted licensees during his time at Philips – and here the licensee market looks very different. For handsets consequently, only larger corporations such as Apple, Samsung, Huawei, HTC but also new player such as Xiomi, OPPO or Vivo are on the market, who are the licensees that IPCom approaches. While easy to identify and big pockets guaranteed, these companies are very experienced in defending themselves and that makes licensing quite challenging.
Pio stresses in his final remarks that for him it often goes back to the fundamentals of intellectual property rights. Imagine someone wants to use the house you own and live in .Yes you can rent out your house but you can still decide who is allowed to rent it and for what price. For intellectual property you have the same rights and the legal system must ensure that you are able to enforce your rights and that you will receive a fair compensation for the use of your rights.
#7 Matthias Schneider | The Role of SEPs in the Auto Industry
Matthias Schneider has been Chief Licensing Officer (patents) at Audi AG until end of 2021. Before he was the Vice President for IPR at Siemens Communication Devices and BenQ Mobile and Global Head of Defensive Licensing at Nokia Corp. Matthias knows both sides of the table working for telecommunication companies and for the automotive OEM Audi for several years. Matthias joined Audi to negotiate important SEP licensing deals. Here Matthias was one of the first to negotiate a contract with the license program of Avanci for Audi where some provisions of this contract are still used across the whole automotive sector.
“Avanci will later this year launch the 5G patent program and my individual expectation would be an aggregate royalty for 2G, 3G, 4G and 5G probably in the low $20 range.”
However, the price will depend on having again most of the major SEP holders join Avanci so that the coverage of 5G SEPs is high enough to justify the price.
Matthias believes the problem was that the automotive suppliers did not take royalty payments for 2G, 3G and 4G SEPs into account when negotiating the supplier contract years ago, even signing indemnification clauses. Now OEM and the suppliers must negotiate who will pay the royalties and margins in the automotive supply chain are very low. Interestingly, in the past only the high-end brands have joined which may make sense given that royalties for a Fiat are at $15 the same as royalties for a Ferrari. The marginal costs of $15 are therefore much more relevant for certain automotive OEMs. Matthias however points out that it must depend on where in the car the patented technology, in this case the standard, creates value. Is the value higher for expensive cars compared to for cheaper cars? Matthias believes there is no reason why the $15 should not also be applicable to a small low-priced car such as a Fiat or Polo.
So where to license in the value chain? Well, Matthias points out that it is almost impossible to understand where the patented technology creates value when you go to the chip set manufacturer level. Here no one will know where the chip may end up because tracing chips through the supply chain is almost impossible and therefore the patent owner cannot verify if certain end products contain licensed chips. But as soon as you e.g. have (in the cellular communicate space) space an International Mobile Equipment Identifier (IMEI) number, the network access component and its license status becomes traceable. Therefore, licensing on the level of the manufacturer of a network access device (and afterwards) is possible. A SEP license for tier 1 suppliers is thus possible and Matthias also sees increasing willingness from SEP holders to go up at least one level in the value chain with their SEP license offers.
Finally, Matthias comments on the challenge that local courts establish global portfolio FRAND rates even if they set lower rates for certain jurisdictions (e.g. China) compared to Europe and the US. Licensees often prefer to negotiate and potentially litigate on individual patents in single jurisdictions. Matthias believes that courts such as the UK court who set a global FRAND rate for SEP portfolios are stepping a bit out of their comfort zone. Matthias would prefer a WIPO based arbitration body for FRAND rates. How that is managed remains to be seen.
Matthias’ take on 5G and SEP licensing for the IoT is that this will have to work very differently as the royalty income per IoT device manufacturer is expected not as high as for smartphone manufacturers. Even the automotive market is far less lucrative than the handset market, because the number of cars sold globally is only around 7% of the number of smartphones. The main target market for SEP owners thus will remain the handset manufacturers.
Matthias final comments is: The litigation situation is not as bad as many people believe it is. 90% of deals are done without litigation and I am not worried that this will change.
#6 Christa Laser | SEP litigation and legal trends in the US patent system
Professor Christa Laser comes to Cleveland-Marshall after nearly a decade of practice experience as an intellectual property litigator at the law firms WilmerHale and Kirkland & Ellis LLP. She has deep expertise in patents, trademarks, copyrights, false advertising, pharmaceutical litigation and regulation, and technology law. She has represented leading life sciences and technology companies in all stages of trial and appellate matters and consulted on legislative changes to intellectual property laws.
In her time during law practice, she gained a lot of experience representing clients such as Samsung or Lenovo in their defense strategy around standard essential patents (SEPs). SEPs play a particular role in litigation as in such litigation it is not only about questions such as validity or infringement but also about the obligation to disclose SEPs or the big question of what a FRAND rate is. Disputes in other spaces are very different. In bio tech for example the infringement is often not challenged as typically both parties agree on what the compound looks like and how it’s used. Standardized technology is in comparison much more complex and it is thus much more difficult to find evidence for infringement.
“One challenge with SEP litigation is that infringement is happening globally, while patent litigation is always local.”
And related to that we see a lot of SEP litigation where courts file so called anti suit injunctions. A court would issue such an injunction to prevent other courts from deciding the same issue at the same time. This is set to make sure that questions in litigation are decided by only one court. If we don’t do that, we would have chaos as two countries would decide on the same issues that are overlapping and then parties would need to figure out which decision e.g. on rates applies where? The real complexity starts when we have an anti-suit injunction from one country and another country does not agree and files an anti-anti-suit injunction to continue the litigation process. This kind of back and forth creates a lot of inefficiencies and should be avoided as Christa believes we must respect each other legal systems.
After years of legal practice at the major law firms Kikland & Ellis as well as Wilmehale Christa decided to change careers to become a law Professor with the focuses on intellectual property and innovation. She wanted a change in her career to more objectivity look at the legal space. During her law practice she always had to represent one side of the table finding arguments to help the client win. Now she can look at issues from the outside. She still uses her practical experience with teaching her students that get presented real cases where they must then develop a strategy to win the case. Her approach is called the Socratic method a form of cooperative argumentative dialogue, based on asking and answering questions to stimulate critical thinking and to draw out ideas and underlying presuppositions.
Finally, Christa talks about her personal career and the challenge to manage working late hours at a law firm while having two kids being the main responsible childcare parent. She experienced a lot of support from her colleagues and people that helped her along the way, but she still felt it was often very hard to manage. In general, yet women are still expected to give up their careers when having children and the situation is not qual compared to men. Christa can be seen as a role model for many women as she showed others that you can have a career while having children. However, the whole system is a long way from supporting strong women in their career path. We still see a majority of males higher management positions, we still see many more male inventors e.g. listed on patents compared to women and the list goes on where even in the venture capital investment space, women less often receive investments even though statics prove women to be the more successful founders. All that must change, and our society must find ways to make this change happen.
#5 Sonja London | FRAND and the world of technology licensing
Sonja London is General Counsel and Licensing Executive in TactoTek, world-leading innovator in the field of smart surfaces and structural electronics. Sonja has global responsibility of TactoTek’s legal and compliance matters as well as IP, licensing and standardization strategies. Before joining TactoTek, she worked with Nokia Patent Business for 14 years in various roles, in her latest position leading Nokia’s Consumer Electronics licensing globally. Sonja has been deeply involved in licensing of various technologies (such as cellular 3G, 4G and 5G, wifi, audio and video codecs AVC/HEVC) for consumer electronics, mobile devices and infrastructure products. Her experience covers also patent pools, joint licensing, patent transactions as well as digitalizing and managing licensing business. In addition, Sonja is involved in deep technology and software start-ups and IP and growth companies as board member, investor and advisor. She serves as Non-Executive Director of Licensing Executives Society International. Sonja holds a Master of Laws from University of Helsinki and Executive MBA from Aalto University. She is ranked in IAM Strategy 300 as one of the world top IP Strategists.
Sonja started with Nokia about 15 years ago, where SEP licensing evolved from mostly cross licensing across a few large companies to out licensing, and SEPs began to create considerable revenues for Nokia. In her latest role as Head of Consumer Electronics Licensing she was able to grow the program and team over the years which was highly successful.
“A 2-year process can be considered quick where both parties – the licensor and licensee – are willing to make a SEP deal.”
However, just having a SEP portfolio of “gold nuggets” is not enough to create revenues. Put differently licensing is a hard job as negotiations with licensees are complex and lengthy. For Sonja a 2-year process can be considered quick where both parties – the licensor and licensee – are willing to make a SEP deal. Sonja however also had situations which she describes as “hold out” where licensees don’t answer to emails for almost a year, make unreasonable requests such as NDAs limiting the licensors of using their own information, ask for highly confidential business insights or even make specific offers verbally within a 60-minute time frame to answer. All of these “delaying” tactics make it difficult to find agreement and closing deals takes a lot of time. This back and forth in FRAND negotiations is sometimes referred to as “FRAND dance”. And Sonja notes it is often some of the biggest companies in the world that hold out, very strategically and that should be seen as issue for the whole market. Companies such as Nokia put in years and billions of dollars in R&D to develop technologies such as 5G. Royalties are re-invested to develop the next generation.
15 years ago SEP licensing went from cross-licensing to out-licensing. Recently SEP licencing reached another level going beyond the smart phone industry. New industries and licensing may work in very different licensing model and may create new challenges.
Sonja has left Nokia last year joining TactoTek as the General Counsel and Licensing Executive. In her new position she does a lot more technology licensing these days. The big difference to pure patent licensing and technology licensing is that the license comes with technology and know-how. Here licensees are much easier to work with because the perception is positive: the license delivers tangible value and licensing is more of a cooperation process.
While working in licensing for many years Sonja also wears many other hats being a board member or a minority investor for software start-ups but she also does a lot of non-profit work. Sonja has served as board member and President of the Licensing Executives Society Scandinavia, expanding her influence also to international level in the LES High-Tech Committee and from 2021 also as a board member of LES International. Sonja is passionate about great leadership, diversity and inclusion at work. Her latest and dearest pro-bono advocacy project has been co-founding the Women in Licensing Alliance for LES International, an international initiative aiming to visibly role model and support the inclusion of women in the licensing profession and leadership.
#4 Justus Baron | An economist’s view on FRAND in light of the current SEP policy debate
Justus Baron (PhD) is a Senior Research Associate at the Center on Law, Business, and Economics at Northwestern University’s Pritzker School of Law. His previous research positions include Mines ParisTech, Cerna (2009-2012) and Sciences Po Paris, Department of Economics as an Adjunct lecturer and researcher (2012-2013). He has also served as a visiting researcher at the Hitotsubashi University, Institute of Economic Research and Technische Universität Berlin, Chair of Innovation Economics. Justus met Tim during his PhD in 2009, when they worked together in Berlin and Paris. In 2009 they were among the first economists to use patent declarations data from SSOs such as ETSI, IEEE or ITUT to empirically study the interplay of patents and standards.
Today, Justus’ research on technology standards and SEPs has been published in leading academic journals, including Research Policy, the Journal of Economics, Management, and Strategy, and the International Journal of Industrial Organization. Justus has authored several policy reports on FRAND licensing and standards organizations, in particular for the European Commission; and he was a member of the European Commission’s SEP Expert Group. Just recently the European Commission (DG GROW) has commissioned a new study to a consortium led by Justus and Tim and other consortium members, assisting the European Commission with an “Economic Impact Assessment on Standard Essential Patents (SEPs)”.
In the Podcast Justus elaborates on the topics that this empirical research study will cover, including the identification of potential inefficiencies and costs both for SEP holders and standard implementors in the process of agreeing to a FRAND license. Justus addresses several of the big questions around SEP licensing, such as what stage in the value chain SEPs will be licensed and how one can define a FRAND rate. Justus also sheds light on questions like how should regulators such as the EU Commission be involved and who defines the standards on how FRAND should be negotiated? Should standards organizations be involved in SEP determination or FRAND rate discussions? Such questions of governance must be answered by studying the impact of regulation and what incentivizes these sets. Justus feels that as an empirical economist, he can contribute to a better understanding of some complex aspects of FRAND and SEP licensing.
Transparency about SEP issues is important, but here transparency also means to be transparent about the limitations of data and empirical analysis. In the end, the available information is never perfect and we have to consider that in any analysis that we do. In his work for the European Commission’s SEP Expert Group, it was very important to reflect different views and to produce a balanced report. In order to keep that balance, the report reflects many individual experts’ viewpoints and specific recommendations, rather than aiming for a consensus view on inherently controversial issues. That in the end may have also been why some criticized the European Commission’s SEP Expert Group final report as falling short of resolving some of the open controversies. Justus is among the leading economists that study SEPs, and he believes the next years will be even more interesting when the licensing of SEPs for IoT will start to pick up.
#3 Luke McLeroy | How the Avanci patent license program may influence the next technological revolution
Luke is an intellectual property attorney with 15 years of experience negotiating collaborative solutions for patent holders and technology developers. He was involved in some of the very early standard essential patent litigations representing Nortel and Ericsson working as an associate and then a principal at the law firm McKool Smith in Dallas. Luke went on to work for Ericsson where he led the company’s North American patent licensing business. In this role, he helped develop and license Ericsson’s patent portfolio, analyzing and valuing patent portfolios in multiple technology areas such as wireless connectivity, codecs, data networks, and security, and advocating policy positions to legislative bodies, competition agencies, standard-setting organizations, and other forums. Today Luke is the Senior Vice President – Business Development at Avanci, a licensor collective program for 2G, 3G and 4G SEPs for the automotive application.
“The Avanci 5G patent pool is set to launch in 2022”
In the interview Luke elaborates on the licensing model of Avanci and how they solved the chicken and egg problem with having first company join as licensors (8 initial members) and having BMW as the first automotive OEM to become a licensee. Luke also elaborated on the revenue sharing model among the SEP licensors and that they go beyond simple patent counting but also use other indicators of SEP value such as standard contributions as well as patent portfolios that have been successfully licensed before.
Luke identifies challenges with licensing SEP to automotive OEMs due to earlier agreements in the supply chain where the costs of SEP royalties were not considered. Now OEMs have to go back to the suppliers to negotiate to share the costs of the SEP license. Often, when OEMs and suppliers come to an agreement about how these costs are shared, OEMs are set to join Avanci.
Luke also discusses how a one stop shop license program such as Avanci benefits the IoT industry and that Avanci will launch a 5G patent pool next year. This 5G patent pool will likely have different offerings in terms of technology packages to accommodate the different use cases of connectivity in a car.
#2 Jon Putnam | How to determine a FRAND rate for standard essential patents?
Jon Putnam founded Competition Dynamics as a platform for economic research and testimony at the intersection of intellectual property, competition, and international trade law. From 2001 to 2005, Dr. Putnam held a professorship in the Law and Economics of Intellectual Property at the Centre for Innovation Law and Policy, University of Toronto. Dr. Putnam has also held academic appointments at the Boston University Graduate School of Management, Columbia University Schools of Law and Business, Vassar College, and Yale College. Dr. Putnam has been retained in more than 100 consulting engagements and has testified more than 40 times in patent, antitrust, copyright, trade secret, contract and tax actions in federal, state and bankruptcy courts; before the US Federal Trade Commission, International Trade Commission, and Tax Court; in US and international arbitrations; and in regulatory proceedings in Canada and India.
“We had access to all SEP license contracts since the year 2000 (FTC v Qualcomm subpoena) to compare the royalty rates. It turned out the rates per patent are the same across, 2G, 3G and 4G.”
In the interview Jon revealed some of the SEP related litigation cases he worked on. In one case, the Qualcomm ITC litigation, all US based SEP cross licensing agreements were subpoenaed. That why Jon and his team was able to create a database how much royalties per paid for 2G, 3G and 4G per SEPs. The results confirm that the price per patent did not increase in standard generation advances. Which in his opinion makes sense as the same R&D efforts and spending per patent was conducted by the companies.
In another litigation case, Jon and his team looked at in total 8 SEP determination studies for 2G, 3G and 4G. The argument is that expert witness reports that e.g. use a sample of declared patent to extrapolate this to the overall number of SEPs per standard are biased and the sample as well as the claim charting method is not straight forward and different experts arrive at different results. In light of these disagreements and findings of unreliability, Jon and his team developed a comprehensive method to estimate the likelihood of essentiality for each major contributor’s patent portfolio. Here they took into account systematic differences in essentiality probabilities across the studies, contributors and standards. This method aggregated all available information across the studies, and thus forms the single best estimate of essentiality for any given contributor’s portfolio. Jon argues that “best estimate” is therefore the single best observable proxy for the unobservable beliefs held by each party to portfolio licensing negotiations. Jon and his team also relied on this method as part of computing the relative strengths of industry patent portfolios to predict the payments observed in SEP licenses, in the recent Apple v Qualcomm litigation. The results show that expectations of each portfolio’s essentiality rate are an important component of the portfolio’s relative strength.
#1 Tim Pohlmann – Why SEPs Matter? A Market Assessment
In this very first podcast episode, Tim Pohlmann, CEO and Founder of IPlytics, kicks off the topics he will talk about in upcoming episodes. Here Tim will invite industry leaders, academics, and policy makers on his “SEP Couch” to discuss current topics around standard essential patents (SEPs) licensing, deal making, patent pooling, litigation as well as policy and regulation around FRAND. Guests are interviewed in a 45-minute discussion elaborating on their career background and discussing what’s currently debated around SEPs in the market. This podcast format encourages an open discussion while it remains neutral to the controversial opinions and viewpoints of invited guests. Tim also provides background on his own career and how he got involved with SEPs and standards starting as PhD in 2009 at the TU Berlin to then work as a post doc at CERNBA MinesParis Tech, as a consult and then founding IPlytics in 2014.